EXHIBIT 2.1
AGREEMENT AND PLAN OF DISTRIBUTION
BY AND BETWEEN
F.N.B. CORPORATION
AND
FIRST NATIONAL BANKSHARES OF FLORIDA, INC.
DATED AS OF DECEMBER __, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................................4
SECTION 1.1. General...................................................................................4
SECTION 1.2. Reference; Interpretation................................................................12
ARTICLE II DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS................................................13
SECTION 2.1. The Distribution And Other Transactions..................................................13
SECTION 2.2. Assumption and Satisfaction of Liabilities...............................................14
SECTION 2.3. [Intentionally Removed]..................................................................14
SECTION 2.4. Limited Representations or Warranties....................................................14
SECTION 2.5. Removal of Parent Group from Certain Guarantees; Releases of Parent Group from
Liabilities..............................................................................14
SECTION 2.6. Removal of SpinCo from Certain Guarantees; Releases of SpinCo from Liabilities...........15
SECTION 2.7. Witness Services.........................................................................16
SECTION 2.8. Conveyancing and Assumption Instruments..................................................16
SECTION 2.9. Ancillary Agreements.....................................................................16
SECTION 2.10. Corporate Names; Trademarks..............................................................16
SECTION 2.11. Post-Distribution Remittances............................................................17
SECTION 2.12. Non-Solicitation.........................................................................17
SECTION 2.13. Further Assurances.......................................................................18
ARTICLE III INDEMNIFICATION......................................................................................18
SECTION 3.1. Indemnification by Parent................................................................18
SECTION 3.2. Indemnification by SpinCo................................................................18
SECTION 3.3. Procedures for Indemnification...........................................................19
SECTION 3.4. Indemnification Payments.................................................................20
ARTICLE IV ACCESS TO INFORMATION.................................................................................20
SECTION 4.1. Provision of Corporate Records...........................................................20
SECTION 4.2. Access to Information....................................................................21
SECTION 4.3. Reimbursement; Other Matters.............................................................21
SECTION 4.4. Confidentiality..........................................................................21
SECTION 4.5. Privileged Matters.......................................................................22
SECTION 4.6. Ownership of Information.................................................................23
SECTION 4.7. Retention of Records.....................................................................23
SECTION 4.8. Limitation of Liability; Release.........................................................24
SECTION 4.9. Other Agreements Providing for Exchange of Information...................................24
ARTICLE V DISPUTE RESOLUTION.....................................................................................24
SECTION 5.1. Negotiation..............................................................................24
SECTION 5.2. Mediation................................................................................24
SECTION 5.3. Continuity of Service and Performance....................................................24
SECTION 5.4. Other Remedies...........................................................................24
SECTION 5.5. Tolling..................................................................................25
SECTION 5.6. Determination of Book Value..............................................................25
ARTICLE VI INSURANCE.............................................................................................25
SECTION 6.1. Allocation of Policies...................................................................25
SECTION 6.2. Post-Effective Time Claims...............................................................26
SECTION 6.3. Administration; Other Matters............................................................26
SECTION 6.4. Agreement for Waiver of Conflict and Shared Defense......................................27
SECTION 6.5. Cooperation..............................................................................28
ARTICLE VII MISCELLANEOUS........................................................................................28
SECTION 7.1. Complete Agreement; Construction.........................................................28
SECTION 7.2. Ancillary Agreements.....................................................................28
SECTION 7.3. Counterparts.............................................................................28
SECTION 7.4. Survival of Agreements...................................................................28
SECTION 7.5. Distribution Expenses....................................................................28
SECTION 7.6. Notices..................................................................................28
SECTION 7.7. Waivers..................................................................................29
SECTION 7.8. Amendments...............................................................................29
SECTION 7.9. Successors and Assigns...................................................................29
SECTION 7.10. Termination .............................................................................29
SECTION 7.11. Subsidiaries.............................................................................29
SECTION 7.12. Third-Party Beneficiaries................................................................29
SECTION 7.13. Title and Headings.......................................................................30
SECTION 7.14. Exhibits and Schedules...................................................................30
SECTION 7.15. Governing Law............................................................................30
SECTION 7.16. Severability.............................................................................30
SECTION 7.17. Consolidation, Merger, Etc...............................................................30
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EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
Exhibit A Employee Benefits Agreement
Exhibit B Tax Disaffiliation Agreement
SCHEDULES
Schedule Description of Schedule
-------- -----------------------
Schedule 1.1(p) Corporate Transactions
Schedule 1.1(pp) Parent Business
Schedule 1.1(tt) Parent Liabilities
Schedule 1.1(uu) Parent Policies
Schedule 1.1(ww) Parent Shared Carryover Policies
Schedule 1.1(xx) Parent Shared Non-Carryover Policies
Schedule 1.1(zz) Parent Subsidiaries
Schedule 1.1(iii) Shared Liabilities
Schedule 1.1(lll) SpinCo Balance Sheet
Schedule 1.1(mmm) SpinCo Business
Schedule 1.1(qqq) SpinCo Liabilities
Schedule 1.1(rrr) SpinCo Policies
Schedule 1.1(uuu) SpinCo Subsidiaries
Schedule 2.1(d) Consents
Schedule 2.5(a) Guarantees from which Parent Group Members
are to be Released
Schedule 2.6(a) Guarantees from which SpinCo Group Members
are to be Released
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AGREEMENT AND PLAN OF DISTRIBUTION
This AGREEMENT AND PLAN OF DISTRIBUTION (this "Agreement"), dated as of
December ___, 2003, by and between F.N.B. Corporation, a
Florida corporation
("Parent"), and First National Bankshares of
Florida, Inc., a
Florida
corporation ("SpinCo");
WHEREAS, the Board of Directors of Parent has determined that it is in
the best interests of Parent and its stockholders to separate Parent's existing
businesses into two independent businesses;
WHEREAS, in furtherance of the foregoing, on August 12, 2003, SpinCo
was formed and became a wholly owned subsidiary of Parent, and on or before the
Effective Date Parent shall transfer or cause its Subsidiaries to transfer the
SpinCo Assets to the SpinCo Group and shall cause the SpinCo Group to assume the
SpinCo Liabilities, all as more fully described in this Agreement and the
Ancillary Agreements;
WHEREAS, the Board of Directors of Parent has further determined that
it is appropriate and desirable, on the terms and conditions contemplated
hereby, for Parent to distribute to holders of shares of Parent Common Stock all
of the outstanding shares of SpinCo Common Stock (the "Distribution");
WHEREAS, the Distribution is intended to qualify as a tax-free spin-off
under Sections 355 and 368 of the Code; and
WHEREAS, the parties hereto have determined to set forth the principal
corporate and other transactions required to effect the Distribution and to set
forth other agreements that will govern certain other matters prior to and
following the Distribution.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. General. Unless otherwise defined herein or unless the
context otherwise requires, as used in this Agreement, the following terms shall
have the following meanings:
(a) "Action" shall mean any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Authority or any arbitration or mediation tribunal.
(b) "Affiliate" shall mean, when used with respect to any specified
Person, a Person that directly or indirectly controls, is controlled by, or is
under common control with such specified Person; provided, however, that for
purposes of this Agreement, any Person who was a member of both Groups prior to
the Distribution shall be deemed to be an Affiliate only of the Group of which
such Person is a member following the Distribution. As used herein, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or other interests, by contract or otherwise. Any
contrary provision of this Agreement notwithstanding, neither Parent nor any
Parent Subsidiary shall be deemed to be an Affiliate of SpinCo, and neither
SpinCo nor any SpinCo Subsidiary shall be deemed to be an Affiliate of Parent.
(c) "Agent" shall have the meaning set forth in Section 2.1(b) of this
Agreement.
(d) "Agreement" shall mean this Agreement.
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(e) "Agreement Disputes" shall have the meaning set forth in Section
5.1 of this Agreement.
(f) "Ancillary Agreements" shall mean all of the written agreements,
instruments, understandings, assignments or other arrangements (other than this
Agreement) entered into by the parties hereto or any other member of their
respective Groups in connection with the transactions contemplated hereby,
including the Conveyancing and Assumption Instruments, the Employee Benefits
Agreement, the Tax Disaffiliation Agreement, and the Leases and Subleases.
(g) "Applicable Rate" shall mean the "prime rate" of interest per
annum, as published from time to time in The Wall Street Journal, Eastern
Edition, plus four percent (4%).
(h) "Assets" shall mean assets, properties and rights, wherever located
(including in the possession of vendors or other third parties or elsewhere),
whether real, personal or mixed, tangible, intangible or contingent, in each
case whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any Person,
including, but not limited to, the following:
(i) tangible personal property (such as equipment and
furniture, including, but not limited to, office machinery, automated
teller machines, shelving, office supplies and artwork, automobiles and
trucks);
(ii) real property, leaseholds and subleaseholds therein,
improvements, fixtures, and fittings thereon, including, but not
limited to, any banking houses, drive-in banking facilities, teller
facilities and administrative offices together with appurtenant
parking, storage and service facilities, and easements, rights-of-way,
and other appurtenants thereto (such as appurtenant rights in and to
public streets);
(iii) intellectual property, goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and
rights thereunder, remedies against infringements thereof, and rights
to protection of interests therein under the laws of all jurisdictions;
(iv) agreements, contracts, indentures, mortgages,
instruments, guaranties, other similar arrangements, and rights
thereunder (collectively, "Contracts");
(v) all rights under insurance policies and all rights in the
nature of insurance, indemnification or contribution;
(vi) accounts, notes, and other receivables;
(vii) securities,
(viii) claims, prepayments, refunds, loans, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment;
(ix) franchises, approvals, Permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained
from any Governmental Authority;
(x) books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies,
reports, and other printed or written materials; and
(xi) cash.
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(i) "Book Value" shall mean, with respect to Parent or SpinCo, the
stockholders' equity of such party, determined in accordance with generally
acceptable accounting principles in the United States, as of the close of
business on the Distribution Date.
(j) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which national banking associations are authorized or obligated by law
or executive order to close.
(k) "Claims Administration" shall mean the processing of claims made
under the Parent Shared Policies, including the reporting of claims to the
insurance carriers, management and defense of claims and providing for
appropriate releases upon settlement of claims.
(l) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder, including any successor
legislation.
(m) "Commission" shall mean the Securities and Exchange Commission.
(n) "Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person.
(o) "Contracts" shall have the meaning set forth in the definition of
Assets.
(p) "Conveyancing and Assumption Instruments" shall mean, collectively,
the various agreements, instruments and other documents to be or heretofore
entered into to effect the Corporate Transactions or otherwise to effect the
transfer of Assets and the assumption of Liabilities in the manner contemplated
by this Agreement, the Ancillary Agreements and the Corporate Transactions.
(q) "Corporate Transactions" shall mean, collectively, (a) each of the
mergers, transfers, conveyances, contributions, assignments, dividends,
dissolutions, assumptions, redemptions, purchases and other transactions
described and set forth on Schedule 1.1(q) attached hereto, and (b) such other
mergers, transfers, conveyances, contributions, assignments, dividends,
dissolutions, assumptions, redemptions, purchases and other transactions that
may be appropriate or required to be accomplished, effected or consummated by
Parent or SpinCo or any of their respective Subsidiaries and Affiliates so that:
(i) the SpinCo Assets, SpinCo Liabilities and SpinCo Business shall be owned,
directly or indirectly, by SpinCo after giving effect to the Distribution; and
(ii) the Parent Assets, Parent Liabilities and Parent Business shall be owned,
directly or indirectly, by Parent after giving effect to the Distribution.
(r) "Distribution" shall have the meaning set forth in the recitals to
this Agreement.
(s) "Distribution Date" shall mean such date as may be determined by
the Board of Directors of Parent as the date as of which the Distribution shall
be effected.
(t) "Distribution Record Date" shall mean such date as may be
determined by the Board of Directors of Parent, or such committee of such Board
of Directors as shall be designated by the Board of Directors of Parent, as the
record date for the Distribution.
(u) "Effective Time" shall mean 12:01 a.m., Naples,
Florida time, on
the Distribution Date.
(v) "Employee Benefits Agreement" shall mean the Employee Benefits
Agreement by and between Parent and SpinCo, which agreement shall be entered
into effective as of the Distribution Date in the form attached hereto as
Exhibit A.
(w) "Environmental Laws" shall mean any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, principles of common
law, judgments, orders, decrees, Permits,
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concessions, grants, franchises, licenses, agreements or other governmental
restrictions (including the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. 9601, et seq.), whether now or hereafter in
existence, relating to the environment, natural resources, human health or
safety, endangered or threatened species of fish, wildlife and plants, or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including indoor or outdoor air, surface water,
groundwater and surface or subsurface soils), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes or
the investigation, cleanup or other remediation thereof.
(x) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
(y) "Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official, the NYSE, the Nasdaq Stock Market, or other
regulatory, administrative or governmental authority.
(z) "Group" shall mean with respect to Parent, the Parent Group and,
with respect to SpinCo, the SpinCo Group.
(aa) "Indemnifying Party" shall have the meaning set forth in Section
3.3(a) of this Agreement.
(bb) "Indemnitee" shall have the meaning set forth in Section 3.3(a) of
this Agreement.
(cc) "Information Statement" shall mean the Information Statement filed
with the Commission as part of the Registration Statement and mailed to the
holders of shares of Parent Common Stock in connection with the Distribution,
including any amendments or supplements thereto.
(dd) "Insurance Administration" shall mean, with respect to each Parent
Shared Policy, (i) the accounting for premiums, retrospectively rated premiums,
defense costs, indemnity payments, deductibles and retentions, as appropriate,
under the terms and conditions of each of the Parent Shared Policies; (ii) the
reporting to excess insurance carriers of any losses or claims which may cause
the applicable limits of any Parent Shared Policy to be exceeded; (iii) the
distribution of Insurance Proceeds as contemplated by this Agreement; and (iv)
any and all other actions reasonably necessary for the administration of the
Parent Shared Policies.
(ee) "Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on behalf
of an insured.
(ff) "Insured Claims" shall mean those Liabilities that, individually
or in the aggregate, are covered within the terms and conditions of any of the
Parent Shared Policies, whether or not subject to deductibles, self-insured
retentions, co-insurance, uncollectibility or retrospectively rated premium
adjustments.
(gg) "IRS" shall mean the Internal Revenue Service.
(hh) "Law" shall mean any code, law, ordinance, regulation, reporting
or licensing requirement, rule, or statute applicable to a Person or its Assets,
liabilities, or business, including those promulgated, interpreted, or enforced
by any Governmental Authority.
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(ii) "Leases" shall mean the leases by and between members of the
Parent Group and members of the SpinCo Group, which leases shall be entered into
effective as of the Distribution Date in such form as is agreed to by Parent and
SpinCo.
(jj) "Liabilities" shall mean any and all debts, liabilities,
obligations, responsibilities, response actions, losses, deposits as defined in
Section 3(l) of the Federal Deposit Insurance Act, damages (whether
compensatory, punitive or treble), fines, penalties and sanctions, absolute or
contingent, matured or unmatured, liquidated or unliquidated, foreseen or
unforeseen, joint, several or individual, asserted or unasserted, accrued or
unaccrued, known or unknown, whenever arising, including those arising under or
in connection with any Law (including any Environmental Law), Action, threatened
Action, order or consent decree of any Governmental Authority, or any award of
any arbitration tribunal, and those arising under any contract, guarantee,
commitment or undertaking, whether sought to be imposed by a Governmental
Authority, private party, or party to this Agreement, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
or otherwise, and including any costs, expenses, interest, attorneys' fees,
disbursements and expenses of counsel, expert and consulting fees and costs
related thereto or to the investigation or defense thereof.
(kk) "Loss" shall mean any loss, Liability, damages, claim, demand,
judgment or settlement of any nature or kind, known or unknown, fixed, accrued,
absolute or contingent, liquidated or unliquidated, including all reasonable
costs and expenses (legal, accounting or otherwise as such costs are incurred)
relating thereto. The amount of any indemnifiable Loss shall be reduced by the
net amount of the Tax or insurance benefit actually realized by an indemnified
party by reason of such Loss.
(ll) "Notices" shall have the meaning set forth in Section 7.6 of this
Agreement.
(mm) "NYSE" shall mean the New York Stock Exchange, Inc.
(nn) "Parent" shall have the meaning set forth in the preamble to this
Agreement.
(oo) "Parent Assets" shall mean, collectively, all the Assets owned or
held by Parent or any Parent Subsidiary immediately after giving effect to the
Corporate Transactions, except the SpinCo Assets.
(pp) "Parent Business" shall mean each and every business conducted at
any time by Parent Group prior to the Effective Time (including those businesses
set forth on Schedule 1.1(pp)), including each and every business of the Parent
Group which has been discontinued, sold or transferred, but excluding the SpinCo
Business.
(qq) "Parent Common Stock" shall mean the Common Stock, par value $0.01
per share, of Parent.
(rr) "Parent Group" shall mean Parent and the Parent Subsidiaries.
(ss) "Parent Indemnitee" shall mean:
(i) Parent and each Affiliate thereof after giving effect to
the Corporate Transactions and the Distribution; and
(ii) each of the respective past, present and future
Representatives of any of the entities described in the immediately
preceding clause (i) and each of the heirs, executors, successors and
assigns of any of such Representatives; provided, however, that in no
event shall the term "Parent Indemnitee" include SpinCo or any
Affiliate of SpinCo.
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(tt) "Parent Liabilities" shall mean:
(i) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be retained or assumed by Parent or any
member of the Parent Group, and all agreements, obligations and
Liabilities of any member of the Parent Group under this Agreement or
any of the Ancillary Agreements;
(ii) all Liabilities set forth on Schedule 1.1(tt); and
(iii) all Liabilities (other than Taxes and any
employee-related Liabilities which are specifically covered by the Tax
Disaffiliation Agreement and the Employee Benefits Agreement,
respectively) primarily relating to, arising out of or resulting from:
(A) the operation of the Parent Business, as
conducted at any time prior to, on or after the Distribution
Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any Representative
(whether or not such act or failure to act is or was within
such Person's authority));
(B) the operation of any business conducted by Parent
or any Parent Subsidiary at any time after the Effective Time
(including any Liability relating to, arising out of or
resulting from any act or failure to act by any Representative
(whether or not such act or failure to act is or was within
such Person's authority)); or
(C) any Parent Assets, whether arising before, on or
after the Distribution Date; and
(iv) the Parent's Share of all Shared Liabilities.
Notwithstanding the foregoing, the Parent Liabilities shall
not include: (y) any Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be retained or assumed by SpinCo or any member of the SpinCo
Group; or (z) all agreements and obligations of any member of the SpinCo Group
under this Agreement or any of the Ancillary Agreements. Any contrary provision
of this Agreement notwithstanding, any Liabilities or Losses in respect of any
Action relating to the Parent Business, including those described on Schedule
1.1(tt), shall constitute Parent Liabilities.
(uu) "Parent Policies" shall mean all Policies owned or maintained by
or on behalf of Parent or any Parent Subsidiary that do not provide coverage to
or with respect to the SpinCo Assets or the SpinCo Business, or any part
thereof, including those Policies set forth on Schedule 1.1(uu).
(vv) "Parent Shared Policies" shall mean the Parent Shared Carryover
Policies and the Parent Shared Non-Carryover Policies, collectively.
(ww) "Parent Shared Carryover Policies" shall mean those Policies owned
or maintained by or on behalf of Parent or a Parent Subsidiary set forth on
Schedule 1.1(ww).
(xx) "Parent Shared Non-Carryover Policies" shall mean all Policies
owned or maintained by or on behalf of Parent or any Parent Subsidiary which
provide coverage to or with respect to the SpinCo Group, the SpinCo Assets or
the SpinCo Business, or any part thereof, other than SpinCo Policies and Parent
Shared Carryover Policies, including those Policies set forth on Schedule
1.1(xx).
(yy) "Parent's Share" shall mean the percentage obtained by dividing
(x) the Book Value of Parent by (y) the sum of the Book Value of Parent and the
Book Value of SpinCo.
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(zz) "Parent Subsidiaries" shall mean all of the Subsidiaries of Parent
other than SpinCo and the SpinCo Subsidiaries. The Parent Subsidiaries shall
consist of the entities set forth on Schedule 1.1(zz).
(aaa) "Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person.
(bbb) "Person" shall mean any natural person, corporation, business
trust, limited liability company, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
(ccc) "Policies" shall mean insurance policies and insurance contracts
of any kind (other than life and benefits policies or contracts), including
primary, excess and umbrella policies, master comprehensive general liability
policies, director and officer liability, fiduciary liability, automobile,
aircraft, property and casualty, workers' compensation and employee dishonesty
insurance policies, bonds and self insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
(ddd) "Records" shall have the meaning set forth in Section 4.1 of this
Agreement.
(eee) "Registration Statement" shall mean the registration statement on
Form 10 to effect the registration of the SpinCo Common Stock pursuant to the
Exchange Act.
(fff) "Representative" shall mean, with respect to any Person, any of
such Person's directors, officers, members, employees, agents, consultants,
advisors, accountants, attorneys and representatives.
(ggg) "Rules" shall have the meaning set forth in Section 5.3 of this
Agreement.
(hhh) "Securities Act" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
(iii) "Shared Liabilities" shall mean all Liabilities that are neither
Parent Liabilities (as defined without giving effect to clause (iv) of the
definition of "Parent Liabilities") nor SpinCo Liabilities (as defined without
giving effect to clause (v) of the definition of "SpinCo Liabilities"),
including the Liabilities described on Schedule 1.1(iii).
(jjj) "SpinCo" shall have the meaning set forth in the preamble to this
Agreement.
(kkk) "SpinCo Assets" shall mean collectively, all the Assets that will
be owned by the SpinCo Group as of the Effective Time and after giving effect to
the Corporate Transactions, including:
(i) the capital stock of the SpinCo Subsidiaries;
(ii) all of the Assets reflected on the SpinCo Balance Sheet
or the accounting records supporting such balance sheet;
(iii) all of the Assets expressly allocated to SpinCo or any
of the SpinCo Subsidiaries under this Agreement or any of the Ancillary
Agreements; and
(iv) any other Asset acquired by the Parent Group or the
SpinCo Group from the date of the SpinCo Balance Sheet to the Effective
Time that is owned by the Parent Group or the SpinCo Group as of the
Effective Time and that is of a nature or type that would have resulted
in such Asset being included as an Asset on the SpinCo Balance Sheet
had it been acquired on or
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prior to the date of the SpinCo Balance Sheet, determined on a basis
consistent with the determination of the Assets included on the SpinCo
Balance Sheet.
(lll) "SpinCo Balance Sheet" shall mean the combined balance sheet of
the SpinCo Group, including the notes thereto, as of June 30, 2003, as set forth
on Schedule 1.1(lll).
(mmm) "SpinCo Business" shall mean each and every business to be
conducted after the Effective Time by the SpinCo Group (including those
businesses set forth on Schedule 1.1(mmm)).
(nnn) "SpinCo Common Stock" shall mean the Common Stock, par value
$0.01 per share, of SpinCo.
(ooo) "SpinCo Group" shall mean SpinCo and the SpinCo Subsidiaries.
(ppp) "SpinCo Indemnitees" shall mean:
(i) SpinCo and each Affiliate thereof after giving effect to
the Corporate Transactions and the Distribution; and
(ii) each of the respective past, present and future
Representatives of any of the entities described in the immediately
preceding clause (i) and each of the heirs, executors, successors and
assigns of any of such Representatives; provided, however, that in no
event shall the term "SpinCo Indemnitee" include Parent or any
Affiliate of Parent.
(qqq) "SpinCo Liabilities" shall mean
(i) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be retained or assumed by SpinCo or any
member of the SpinCo Group, and all agreements, obligations and
Liabilities of any member of the SpinCo Group under this Agreement or
any of the Ancillary Agreements;
(ii) all Liabilities set forth on Schedule 1.1(qqq);
(iii) all Liabilities (other than Taxes and any
employee-related Liabilities which are specifically covered by the Tax
Disaffiliation Agreement and the Employee Benefits Agreement,
respectively), primarily relating to, arising out of or resulting from:
(A) the operation of the SpinCo Business, as
conducted at any time prior to, on or after the Distribution
Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any Representative
with respect to the SpinCo Business (whether or not such act
or failure to act is or was within such Person's authority));
(B) the operation of any business conducted by SpinCo
or any SpinCo Subsidiary at any time after the Effective Time
(including any Liability relating to, arising out of or
resulting from any act or failure to act by any Representative
(whether or not such act or failure to act is or was within
such Person's authority)); or
(C) any SpinCo Assets, whether arising before, on or
after the Distribution Date;
(iv) all Liabilities reflected as liabilities or obligations
on the SpinCo Balance Sheet or the accounting records supporting such
balance sheet, and all Liabilities arising or assumed
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after the date of such balance sheet which, had they arisen or been
assumed on or before such date and been retained as of such date, would
have been reflected on such balance sheet, determined on a basis
consistent with the determination of the Liabilities included on the
SpinCo Balance Sheet, subject to any discharge of such Liabilities
subsequent to the date of the SpinCo Balance Sheet, including those
liabilities set forth on Schedule 1.1(qqq); and
(v) SpinCo's Share of all Shared Liabilities.
Notwithstanding the foregoing, the SpinCo Liabilities shall
not include: (y) any Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be retained or assumed by any member of the Parent Group; or (z)
all agreements and obligations of any member of the Parent Group under this
Agreement or any of the Ancillary Agreements. Any contrary provision of this
Agreement notwithstanding, any Liabilities or Losses in respect of any Action
relating to the SpinCo Business, including the matters set forth on Schedule
1.1(qqq), shall constitute SpinCo Liabilities.
(rrr) "SpinCo Policies" shall mean all Policies owned or maintained by
or on behalf of any member of the Parent Group or the SpinCo Group, which relate
specifically to the SpinCo Assets or the SpinCo Business but do not relate to
the Parent Business or the Parent Assets, including those Policies set forth on
Schedule 1.1(rrr).
(sss) "SpinCo's Share" shall mean the percentage obtained by
subtracting the Parent's Share from 100%.
(ttt) "SpinCo Shares" shall mean all of the issued and outstanding
shares of SpinCo Common Stock immediately prior to the Effective Time.
(uuu) "SpinCo Subsidiaries" shall mean the Subsidiaries of SpinCo
identified on Schedule 1.1(uuu).
(vvv) "Subleases" shall mean the subleases, if any, by and between
members of the Parent Group and members of the SpinCo Group, which subleases
shall be entered into effective as of the Distribution Date in such form as is
agreed to by Parent and SpinCo.
(www) "Subsidiary" shall mean with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body.
(xxx) "Tax" shall have the meaning set forth in the Tax Disaffiliation
Agreement.
(yyy) "Tax Disaffiliation Agreement" shall mean the Tax Disaffiliation
Agreement by and between Parent and SpinCo, which agreement shall be entered
into effective as of the Distribution Date in the form attached hereto as
Exhibit B.
(zzz) "Third Party" shall mean a Person who is not a party hereto or a
Subsidiary thereof.
(aaaa) "Third-Party Claim" shall have the meaning set forth in Section
3.3(a) of this Agreement.
SECTION 1.2. Reference; Interpretation. References in this Agreement to
any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include", "includes"
and "including" when used in this Agreement shall be deemed to be followed by
the phrase "without limitation." Unless the context otherwise requires,
references in this
12
Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement. Unless the context otherwise requires, the words "hereof", "hereby"
and "herein" and words of similar meaning when used in this Agreement refer to
this Agreement in its entirety and not to any particular Article, Section or
provision of this Agreement. Neither this Agreement nor any Ancillary Agreement
shall be construed against either party as the principal draftsperson hereof or
thereof.
ARTICLE II
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
SECTION 2.1. The Distribution And Other Transactions.
(a) Certain Transactions. On the Distribution Date, or such earlier
date as Parent deems necessary or appropriate to permit the Distribution to
occur on the Distribution Date,:
(i) Pursuant to the Corporate Transactions, Parent Group shall
contribute, assign, transfer, convey and deliver all of its right,
title and interest in the SpinCo Assets to SpinCo Group, and SpinCo
Group shall accept, assume and agree faithfully to perform and fulfill
all the SpinCo Liabilities, in accordance with their respective terms.
(ii) Pursuant to the Corporate Transactions, SpinCo Group
shall contribute, assign, transfer, convey and deliver all of its
right, title and interest in the Parent Assets to Parent Group, and
Parent Group shall accept, assume and agree faithfully to perform and
fulfill all the Parent Liabilities, in accordance with their respective
terms.
(b) Distribution of Shares by Parent. Prior to the Effective Time,
Parent shall deliver to Parent's stock transfer agent (the "Agent") a
certificate or certificates representing the SpinCo Shares, endorsed by Parent
in blank, for the benefit of the holders of Parent Common Stock, and Parent
shall authorize the Agent to distribute, as soon as practicable following the
Effective Time, the SpinCo Shares to holders of record of shares of Parent
Common Stock on the Distribution Record Date as further contemplated by the
Information Statement and hereby either by crediting the holder's brokerage
account or by delivering a certificate or certificates representing such shares.
SpinCo shall provide any share certificates that the Agent shall require in
order to effect the Distribution.
(c) Applications. Parent shall use its reasonable best efforts to
prepare and file applications with all Governmental Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated, and
SpinCo shall cooperate in the preparation and, where appropriate, filing of such
applications.
(d) Consents. Parent and SpinCo shall each use, and shall cause each of
its respective Subsidiaries to use, its reasonable best efforts to obtain all
Permits and Consents of all third parties and Governmental Authorities necessary
or desirable for the consummation of the transactions contemplated by this
Agreement, including those Consents to transfer and/or assign Contracts from
Third Parties set forth in Schedule 2.1(d). Whether or not each such Permit and
Consent is obtained, nothing in this Section 2.1(d) shall in any way limit the
obligations of the parties under Article III.
(e) State Securities Laws. Prior to the Distribution Date, Parent and
SpinCo shall take all such action as may be necessary or appropriate under the
securities or blue sky laws of states or other political subdivisions of the
United States in order to effect the Distribution.
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(f) Listing Application; Notice to NYSE.
(i) Prior to the Distribution Date, Parent and SpinCo shall
prepare and file with the NYSE a listing application and related
documents and shall take all such other actions with respect thereto as
shall be necessary or desirable in order to cause the NYSE to list on
or prior to the Distribution Date, subject to official notice of
issuance, the SpinCo Shares.
(ii) Prior to the Distribution, Parent shall, to the extent
possible, give the NYSE not less than ten days advance notice of the
Distribution Record Date in compliance with Rule 10b-17 under the
Exchange Act.
(g) Other Transactions. Prior to the Effective Time, the parties hereto
shall have consummated those other transactions in connection with the Corporate
Transactions and the Distribution that are contemplated by the Information
Statement and not specifically referred to in this Section 2.1.
SECTION 2.2. Assumption and Satisfaction of Liabilities. Except as
otherwise specifically set forth in any Ancillary Agreement, after the Effective
Time, (i) Parent shall, or shall cause the applicable member of the Parent Group
to, assume, pay, perform and discharge all Parent Liabilities in the ordinary
course of business, consistent with past practice, and (ii) SpinCo shall, or
shall cause the applicable member of the SpinCo Group to, assume, pay, perform
and discharge all SpinCo Liabilities in the ordinary course of business,
consistent with past practice. To the extent reasonably requested to do so by
another party hereto, each party hereto agrees to execute and deliver such
documents, in a form reasonably satisfactory to such party, as may be reasonably
necessary to evidence the assumption of any Liabilities hereunder.
SECTION 2.3. [Intentionally Removed].
SECTION 2.4. Limited Representations or Warranties. Each of the parties
hereto agrees that no party hereto is, in this Agreement or in any other
agreement or document contemplated by this Agreement or otherwise, making any
representation or warranty whatsoever, as to title or value of Assets being
transferred. It is also agreed that all Assets either transferred to or retained
by the parties, as the case may be, shall be "as is, where is" and that (subject
to Section 2.13) the party to which such Assets are to be transferred hereunder
shall bear the economic and legal risk that such party's or any of the
Subsidiaries' title to any such Assets shall be other than good and marketable
and free from encumbrances. Similarly, each party hereto agrees that no party
hereto is representing or warranting in any way that the obtaining of any
Consents, the execution and delivery of any agreements and the making of any
filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable Contracts or other agreements or the
requirements of any or all applicable Laws or judgments, it being agreed that
the party to which any Assets are transferred shall bear the economic and legal
risk that any necessary consents or approvals are not obtained or that any
requirements of Laws or judgments are not complied with. Notwithstanding the
foregoing, however, except as otherwise provided in Section 2.5 or Section 2.6
hereof, after the Effective Time, the Parent Group shall be solely responsible
for Parent Liabilities, and the SpinCo Group shall be solely responsible for
SpinCo Liabilities.
SECTION 2.5. Removal of Parent Group from Certain Guarantees; Releases
of Parent Group from Liabilities.
(a) Except as otherwise specified in any Ancillary Agreement, SpinCo
shall use its commercially reasonable efforts to have, prior to the Effective
Time, or as soon as practicable thereafter, any member of the Parent Group
removed as guarantor of or obligor for any SpinCo Liability, including in
respect of those guarantees set forth on Schedule 2.5(a) of this Agreement.
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(b) If SpinCo is unable to obtain, or to cause to be obtained, any such
required removal as set forth in clause (a) of this Section 2.5, the applicable
guarantor or obligor shall continue to be bound as such and, unless not
permitted by law or the terms thereof, SpinCo shall or shall cause one of its
Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay,
perform and discharge fully all the obligations or other liabilities of such
guarantor or obligor thereunder from and after the date hereof.
(c) If (i) SpinCo is unable to obtain, or to cause to be obtained, any
such required removal as set forth in clause (a) of this Section 2.5, or (ii)
SpinCo Liabilities arise after the Effective Time but before a member of the
Parent Group which is a guarantor or obligor with reference to any such SpinCo
Liability is removed pursuant to clause (a) of this Section 2.5, then such
guarantor or obligor shall be indemnified by SpinCo for all Liabilities incurred
by it in its capacity as guarantor or obligor in accordance with Article III
hereof. Without limiting the foregoing, SpinCo shall, or shall cause a member of
the SpinCo Group to, reimburse any such member of the Parent Group which is a
guarantor or obligor as soon as practicable (but in no event later than thirty
days) following delivery by Parent to SpinCo of notice of a payment made
pursuant to this Section 2.5 in respect of SpinCo Liabilities.
(d) In the event that, at any time before or after the Effective Time,
Parent identifies any letters of credit, interest rate or foreign exchange
contracts, surety bonds or other Contracts (excluding guarantees) that relate
primarily to the SpinCo Business but for which a member of the Parent Group has
contingent, secondary, joint, several or other Liability of any nature
whatsoever, SpinCo shall, at its expense, take such actions and enter into such
agreements and arrangements as Parent may reasonably request to effect Parent's
(or a member of the Parent Group's ) release or substitution.
SECTION 2.6. Removal of SpinCo from Certain Guarantees; Releases of
SpinCo from Liabilities.
(a) Except as otherwise specified in any Ancillary Agreement, Parent
shall use its commercially reasonable efforts to have, prior to the Effective
Time, or as soon as practicable thereafter, any member of the SpinCo Group
removed as guarantor of or obligor for any Parent Liability, including in
respect of those guarantees set forth on Schedule 2.6(a) of this Agreement.
(b) If Parent is unable to obtain, or to cause to be obtained, any such
required removal as set forth in clause (a) of this Section 2.6, the applicable
guarantor or obligor shall continue to be bound as such and, unless not
permitted by law or the terms thereof, Parent shall or shall cause one of its
Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay,
perform and discharge fully all the obligations or other liabilities of such
guarantor or obligor thereunder from and after the date hereof.
(c) If (i) Parent is unable to obtain, or to cause to be obtained, any
such required removal as set forth in clause (a) of this Section 2.6, or (ii)
Parent Liabilities arise after the Effective Time but before a member of the
SpinCo Group which is a guarantor or obligor with reference to any such Parent
Liability is removed pursuant to clause (a) of this Section 2.6, then such
guarantor or obligor shall be indemnified by Parent for all Liabilities incurred
by it in its capacity as guarantor or obligor in accordance with Article III
hereof. Without limiting the foregoing, Parent shall, or shall cause a member of
the Parent Group to, reimburse any such member of the SpinCo Group which is a
guarantor or obligor as soon as practicable (but in no event later than thirty
days) following delivery by SpinCo to Parent of notice of a payment made
pursuant to this Section 2.6 in respect of Parent Liabilities.
(d) In the event that, at any time before or after the Effective Time,
SpinCo identifies any letters of credit, interest rate or foreign exchange
contracts, surety bonds or other Contracts (excluding guarantees) that relate
primarily to the Parent Business but for which a member of the SpinCo Group has
contingent, secondary, joint, several or other Liability of any nature
whatsoever, Parent shall, at its
15
expense, take such actions and enter into such agreements and arrangements as
SpinCo may reasonably request to effect SpinCo's (or a member of the SpinCo
Group's ) release or substitution.
SECTION 2.7. Witness Services. At all times after the Effective Time,
each of Parent and SpinCo shall use its commercially reasonable efforts to make
available to the other, upon reasonable request, its and its Subsidiaries'
Representatives as witnesses to the extent that such Persons may reasonably be
required in connection with the prosecution or defense of any Action in which
the requesting party or any member of its Group from time to time is involved,
provided that there is no conflict in the Action between the requesting party or
any member of its Group, as applicable, and the other party or any member of its
Group, as applicable. A party providing witness services to the other party
under this Section shall be entitled to receive from the recipient of such
services, upon the presentation of invoices therefor, reimbursement for payments
made for any out-of-pocket expenses (which shall exclude the costs of salaries
and benefits of employees who are witnesses) as may be reasonably incurred in
providing such witness services. In addition, to the extent the provision of
witness services requires an employee of a party to be away from his or her
normal office location for more than four hours on any day, the party receiving
the witness services shall pay the party providing the witness services at a per
diem rate equal to such employee's then current base salary divided by 250.
Witness services in connection with indemnification claims under Article III
shall be handled as provided in Article III.
SECTION 2.8. Conveyancing and Assumption Instruments. In connection
with the transfers of Assets and the assumptions of Liabilities contemplated by
this Agreement, on the Distribution Date, or such earlier date as Parent deems
necessary or appropriate to permit the Distribution to occur on the Distribution
Date, the parties shall execute or cause to be executed by the appropriate
entities the Conveyancing and Assumption Instruments contemplated hereby for
transfers to be effected pursuant to
Florida law or the Laws of one of the other
states of the United States or the laws of the United States, in such other form
as the parties shall reasonably agree. The transfer of capital stock shall be
effected by means of delivery of stock certificates and executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved, and, to the extent required by applicable Law, by notation on
public registries.
SECTION 2.9. Ancillary Agreements. On the Distribution Date, or such
earlier date as Parent deems necessary or appropriate to permit the Distribution
to occur on the Distribution Date, each of Parent and SpinCo shall enter into,
and/or (where applicable) shall cause members of its respective Group to enter
into, the Ancillary Agreements and any other agreements in respect of the
Distribution reasonably necessary or appropriate in connection with the
transactions contemplated hereby and thereby.
SECTION 2.10. Corporate Names; Trademarks. Except as otherwise
specifically provided in the Intellectual Property License Agreement:
(a) As soon as reasonably practicable after the Effective Time, but in
any event within six months thereafter, SpinCo will, and will cause the SpinCo
Subsidiaries to, each at its own expense, remove (or, if necessary, on an
interim basis, cover up) any and all exterior signs and other identifiers
located on any of its real property or premises or on the real property or
premises used by SpinCo or the SpinCo Subsidiaries which refer or pertain to
Parent or which include the Parent or any Parent Subsidiary name, logo or other
trademark or service xxxx or any similar xxxx or any derivative thereof or other
intellectual property included in the Parent Assets.
(b) As soon as is reasonably practicable after the Effective Time, but
in any event within six months thereafter, SpinCo will, and will cause the
SpinCo Subsidiaries to, remove from all letterhead, envelopes, invoices,
products, product labels, product literature, brochures and other communications
media of any kind, all references to Parent, logo and any other trademark or
service xxxx or other intellectual property included in the Parent Assets
(except that SpinCo shall not be required to take any
16
such action with respect to the SpinCo Group's corporate records or any
materials in the possession of Third Parties).
(c) As soon as reasonably practicable after the Effective Time, but in
any event within six months thereafter, Parent will, and will cause the Parent
Subsidiaries to, each at its own expense, remove (or, if necessary, on an
interim basis, cover up) any and all exterior signs and other identifiers
located on any of its real property or premises or on the real property or
premises used by Parent or the Parent Subsidiaries which refer or pertain to
SpinCo or which include the SpinCo or any SpinCo Subsidiary name, logo or other
trademark or any similar xxxx or any derivative thereof or other intellectual
property included in the SpinCo Assets.
(d) As soon as is reasonably practicable after the Effective Time, but
in any event within six months thereafter, Parent will, and will cause the
Parent Subsidiaries to, remove from all letterhead, envelopes, invoices,
products, product labels, product literature, brochures and other communications
media of any kind, all references to SpinCo and its Subsidiaries, logo and any
other trademark or service xxxx or other intellectual property included in the
SpinCo Assets (except that Parent shall not be required to take any such action
with respect to the Parent Group's corporate records or any materials in the
possession of Third Parties).
SECTION 2.11. Post-Distribution Remittances.
(a) Following the Effective Time, Parent will promptly remit to SpinCo,
or reimburse SpinCo for, all amounts, and endorse or remit to SpinCo the
proceeds of all checks, drafts, notes or other documents, received by Parent or
a Parent Subsidiary, that should have otherwise been paid to SpinCo or a SpinCo
Subsidiary.
(b) Following the Effective Time, SpinCo will promptly remit to Parent,
or reimburse Parent for, all amounts, and endorse or remit to Parent the
proceeds of all checks, drafts, notes or other documents, received by SpinCo or
a SpinCo Subsidiary, that should have otherwise been paid to Parent or a Parent
Subsidiary.
SECTION 2.12. Non-Solicitation.
(a) For the period beginning on the Distribution Date and ending on the
second anniversary of the Distribution Date, SpinCo will not and will not permit
any SpinCo Subsidiary to, directly or indirectly, solicit or recruit for its
employment any employee of the Parent Group as of the Distribution Date without
the prior written consent of Parent; provided, however, that nothing in this
Section 2.12(a) shall (i) prohibit the hiring of any natural person who applied
for employment with the SpinCo Group solely in response to any public medium
advertising, (ii) prohibit the hiring of any natural person referred by any
Person whose principal business is the recruiting of prospective employees, or
(iii) prohibit the hiring of any natural person whose employment with a member
of the Parent Group terminated at least three months prior to the date of such
solicitation or recruitment for a bona fide reason not designed or intended to
circumvent the provisions of this Section 2.12(a) and so long as such natural
person was not solicited or recruited by SpinCo or any member of the SpinCo
Group prior to the expiration of such three-month period.
(b) For the period beginning on the Distribution Date and ending on the
second anniversary of the Distribution Date, Parent will not and will not permit
any Parent Subsidiary to, directly or indirectly, solicit or recruit for its
employment any employee of the SpinCo Group as of the Distribution Date without
the prior written consent of SpinCo; provided, however, that nothing in this
Section 2.12(b) shall (i) prohibit the hiring of any natural person who applied
for employment with the Parent Group solely in response to any public medium
advertising, (ii) prohibit the hiring of any natural person referred by any
Person whose principal business is the recruiting of prospective employees, or
(iii) prohibit the
17
hiring of any natural person whose employment with a member of the SpinCo Group
terminated at least three months prior to the date of such solicitation or
recruitment for a bona fide reason not designed or intended to circumvent the
provisions of this Section 2.12(b) and so long as such natural person was not
solicited or recruited by Parent or any member of the Parent Group prior to the
expiration of such three-month period.
SECTION 2.13. Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the foregoing,
each party hereto shall cooperate with the other party, and execute and deliver,
or use commercially reasonable efforts to cause to be executed and delivered,
all instruments, including instruments of conveyance, assignment and transfer,
and to make all filings with, and to obtain all Consents and Permits of any
Governmental Authority or any other Person, and take all such other actions as
such party may reasonably be requested to take by the other party hereto from
time to time, consistent with the terms of this Agreement, the Corporate
Transactions, and the Ancillary Agreements, in order to effectuate the
provisions and purposes of this Agreement and the transfers of Assets and
assumptions of Liabilities and the other transactions contemplated hereby.
(b) If any such transfer of Assets or assumption of Liabilities is not
consummated prior to or at the Effective Time, then the parties hereto shall
continue to take the actions required by Section 2.13(a) to consummate and make
effective such transfer or assumption as soon as practicable after the Effective
Time and, in the case of Assets, shall use their commercially reasonable efforts
to preserve the value of such Assets until the time of transfer. If and when any
such Asset becomes transferable or Liability becomes assumable, such transfer or
assumption shall be effected forthwith. The parties hereto agree that, no later
than the Effective Time, each party hereto shall be deemed to have acquired
complete and sole beneficial ownership to all of the Assets, together with all
rights, powers and privileges incident thereto, and shall be deemed to have
assumed in accordance with the terms of this Agreement and the Ancillary
Agreements all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, that such party is entitled or required to
hold or assume pursuant to this Agreement.
(c) Any disagreement regarding whether any Asset or Liability was or
should have been transferred to, retained by or assumed by the Parent Group or
the SpinCo Group shall be resolved in accordance with the provisions of Article
V.
ARTICLE III
INDEMNIFICATION
SECTION 3.1. Indemnification by Parent. Parent shall, and shall cause
each member of the Parent Group to, indemnify, defend and hold harmless the
SpinCo Indemnitees from and against any and all Losses of the SpinCo Indemnitees
arising out of, by reason of or otherwise in connection with the Parent
Liabilities or alleged Parent Liabilities, including any breach by Parent of any
provision of this Section 3.1. Each member of the Parent Group shall be jointly
and severally liable for the indemnification obligations imposed by this Section
3.1. Subject to the last sentence of Section 7.1, this Agreement is not intended
to address, and should not be interpreted to address, the matters specifically
and expressly covered by the Ancillary Agreements.
SECTION 3.2. Indemnification by SpinCo. SpinCo shall, and shall cause
each member of the SpinCo Group to, indemnify, defend and hold harmless the
Parent Indemnitees from and against any and all Losses of the Parent Indemnitees
arising out of, by reason of or otherwise in connection with the SpinCo
Liabilities or alleged SpinCo Liabilities, including any breach by SpinCo of any
provision of this
18
Section 3.2. Each member of the SpinCo Group shall be jointly and severally
liable for the indemnification obligations imposed by this Section 3.2. Subject
to the last sentence of Section 7.1, this Agreement is not intended to address,
and should not be interpreted to address, the matters specifically and expressly
covered by the Ancillary Agreements.
SECTION 3.3. Procedures for Indemnification.
(a) If a claim or demand is made against a SpinCo Indemnitee or a
Parent Indemnitee (each, an "Indemnitee") by any Third Party (a "Third-Party
Claim") as to which such Indemnitee is entitled to indemnification pursuant to
this Agreement, such Indemnitee shall notify the party which is or may be
required pursuant to Section 3.1 or Section 3.2 hereof to make such
indemnification (the "Indemnifying Party") in writing, and in reasonable detail,
of the Third-Party Claim promptly (and in any event within seven Business Days)
after receipt by such Indemnitee of written notice of the Third-Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure. Thereafter, the
Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event
within five Business Days) after the Indemnitee's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnitee
relating to the Third-Party Claim.
If a Third-Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
elects in accordance with this Section 3.3(a), to assume the defense thereof
with counsel selected by the Indemnifying Party; provided, however, that such
counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying
Party so elect to assume the defense of a Third-Party Claim, the Indemnifying
Party shall, within thirty days (or sooner if the nature of the Third-Party
Claim so requires), notify the Indemnitee in writing of its intent to do so, and
the Indemnifying Party shall thereafter not be liable to the Indemnitee for
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof; provided, however, that such Indemnitee shall have the
right to employ counsel to represent such Indemnitee if, in such Indemnitee's
reasonable judgment, a conflict of interest between such Indemnitee and such
Indemnifying Party exists in respect of such claim that would make
representation of both such parties by one counsel inappropriate, and in such
event the fees and expenses of such separate counsel shall be paid by the
Indemnifying Party. If the Indemnifying Party elects to assume such defense, the
Indemnitee shall have the right to participate in the defense thereof and to
employ counsel, subject to the proviso of the preceding sentence, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel employed
by the Indemnitee for any period during which the Indemnifying Party has failed
to assume the defense thereof (other than during the period prior to the time
the Indemnitee shall have given notice of the Third-Party Claim as provided
above). If the Indemnifying Party so elects to assume the defense of any
Third-Party Claim, all of the Indemnitees shall cooperate with the Indemnifying
Party in the defense or prosecution thereof, including by providing or causing
to be provided, Records and witnesses as soon as reasonably practicable after
receiving any request therefor from or on behalf of the Indemnifying Party.
If an Indemnifying Party elects to assume the defense of a Third-Party
Claim as provided above, in no event will the Indemnitee admit any liability
with respect to, or settle, compromise or discharge, any Third-Party Claim
without the Indemnifying Party's prior written consent; provided, however, that
the Indemnitee shall have the right to settle, compromise or discharge such
Third-Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification obligation
hereunder with respect to such Third-Party Claim and such settlement, compromise
or discharge would not otherwise adversely affect the Indemnifying Party. If an
Indemnifying Party elects to assume the defense of a Third-Party Claim as
provided above, the Indemnitee will agree to any settlement, compromise or
discharge of a Third-Party Claim that the Indemnifying Party may recommend and
that by its terms obligates the Indemnifying Party to pay the full
19
amount of the liability in connection with such Third-Party Claim and releases
the Indemnitee completely in connection with such Third-Party Claim; provided,
however, that, notwithstanding the foregoing, the Indemnitee shall not be
required hereunder to agree to any such settlement, compromise or discharge
involving the stipulation of facts or the adjudication of any question that the
Indemnitee determines in its discretion would have an adverse effect on the
Indemnitee in any other proceeding or otherwise would affect adversely the
Indemnitee. If an Indemnifying Party elects not to assume the defense of a
Third-Party Claim, or fails to notify an Indemnitee of its election to do so as
provided herein, such Indemnitee may compromise, settle or defend such
Third-Party Claim, and such Indemnitee may recover the Losses in connection with
such compromise, settlement or defense from the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third-Party Claim (and shall be liable for
the fees and expenses of counsel incurred by the Indemnitee in defending such
Third-Party Claim) if the Third-Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnitee
which the Indemnitee reasonably determines, after conferring with its counsel,
cannot be separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third-Party Claim can be so separated from
that for money damages, the Indemnifying Party shall be entitled to assume the
defense of the portion relating to money damages.
(b) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
(c) The remedies provided in this Article III shall be cumulative and
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
SECTION 3.4. Indemnification Payments. Unless otherwise agreed to in
writing, indemnification required by this Article III shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Losses are incurred. If the
Indemnifying Party fails to make an indemnification payment required by this
Article III within thirty days after receipt of a xxxx therefor or notice that a
Loss has been incurred, the Indemnifying Party shall also be required to pay
interest on the amount of such indemnification payment, from the date of receipt
of the xxxx or notice of the Loss to, but not including the date of payment, at
the Applicable Rate.
ARTICLE IV
ACCESS TO INFORMATION
SECTION 4.1. Provision of Corporate Records.
(a) Except as otherwise provided in Article III, after the Effective
Time, upon the prior written request by SpinCo for specific and identified
agreements, documents, books, records or files (collectively, "Records") which
relate to (x) SpinCo, the conduct of the SpinCo Business up to the Effective
Time or the ownership of the SpinCo Assets up to the Effective Time, or (y) any
Ancillary Agreement (other than the Tax Disaffiliation Agreement), Parent shall
arrange, as soon as reasonably practicable following the receipt of such
request, to provide such Records (or appropriate copies thereof if Parent has a
reasonable need to retain the originals) in the possession or control of Parent
or any of the Parent Subsidiaries, but only to the extent such items are not
already in the possession or control of SpinCo.
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(b) Except as otherwise provided in Article III, after the Effective
Time, upon the prior written request by Parent for specific and identified
Records which relate to (x) Parent, the conduct of the Parent Business up to the
Effective Time or the ownership of the Parent Assets up to the Effective Time,
or (y) any Ancillary Agreement (other than the Tax Disaffiliation Agreement),
SpinCo shall arrange, as soon as reasonably practicable following the receipt of
such request, to provide such Records (or appropriate copies thereof if SpinCo
has a reasonable need to retain the originals) in the possession or control of
SpinCo or any of the SpinCo Subsidiaries, but only to the extent such items are
not already in the possession or control of Parent.
SECTION 4.2. Access to Information. Except as otherwise provided in
Article III, after the Effective Time, each of Parent and SpinCo shall afford to
the other and its authorized Representatives reasonable access during normal
business hours, subject to appropriate restrictions for classified, privileged
or confidential information, to the personnel, properties, and Records of such
party and its Subsidiaries insofar as such access is reasonably required by the
other party and relates to (x) such other party or the conduct of its business
or ownership of its Assets prior to the Effective Time, (y) any Ancillary
Agreement, or (z) litigation or threatened litigation against such party.
SECTION 4.3. Reimbursement; Other Matters. Except to the extent
otherwise contemplated by any Ancillary Agreement, a party providing Records or
access to personnel, properties or Records to the other party under this Article
IV shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, reimbursement for payments made for supplies, disbursements
and other out-of-pocket expenses (including attorneys' fees and disbursements),
as may be reasonably incurred in providing such Records or access to personnel,
properties or Records.
SECTION 4.4. Confidentiality. Neither (i) Parent nor the Parent
Subsidiaries nor (ii) SpinCo nor the SpinCo Subsidiaries shall use or permit the
use of (without the prior written consent of the other) and each such entity
shall keep, and shall cause its Representatives to keep, confidential all
information concerning the other party in its possession, its custody or under
its control (except to the extent that (A) such information has been in the
public domain through no fault of such party or (B) such information has been
later lawfully acquired from other sources by such party or (C) this Agreement
or any other Ancillary Agreement or any other agreement entered into pursuant
hereto permits the use or disclosure of such information) to the extent such
information, (w) relates to or was acquired during the period up to the
Effective Time, (x) relates to any Ancillary Agreement, (y) is obtained in the
course of performing services for the other party pursuant to any Ancillary
Agreement, or (z) is based upon or is derived from information described in the
preceding clauses (w), (x) or (y), and each party shall not (without the prior
written consent of the other) otherwise release or disclose such information to
any other Person, except such party's Representatives, unless compelled to
disclose such information by judicial or administrative process or unless such
disclosure is required by Law and such party has provided the other party with
prompt notice of such requirement in order to afford the other party the
opportunity to seek an appropriate protective order or other remedy. In the
event that such protective order or other remedy is not obtained or that the
other party does not waive compliance with the provisions of this Section 4.4,
the first party will furnish only that portion of such information that it is
advised by opinion of counsel, which counsel shall be reasonably acceptable to
the other party, is legally required and will endeavor to obtain assurance that
confidential treatment will be accorded the information so furnished.
Notwithstanding anything herein to the contrary, except as reasonably
necessary to comply with applicable securities laws, Parent, SpinCo and their
respective Representatives may (i) consult any tax advisor regarding U.S.
federal income tax treatment or tax structure of the transactions contemplated
by this Agreement, and (ii) disclose to any and all persons, without limitation
of any kind, the U.S. federal income tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to either Parent or
SpinCo relating to such tax treatment or tax structure.
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SECTION 4.5. Privileged Matters. The parties hereto recognize that
legal and other professional services that have been and will be provided prior
to the Effective Time have been and will be rendered for the benefit of each of
the members of the Parent Group, and each of the members of the SpinCo Group,
and that each of the members of the Parent Group, and each of the members of the
SpinCo Group, should be deemed to be the client for the purposes of asserting
all privileges which may be asserted under applicable Law. Except as otherwise
specifically provided in the Tax Disaffiliation Agreement with respect to tax
matters, to allocate the interests of each party in the information as to which
any party is entitled to assert a privilege, the parties agree as follows:
(a) Parent shall be entitled, in perpetuity, to control the assertion
or waiver of all privileges in connection with privileged information which
relates solely to the Parent Business, whether or not the privileged information
is in the possession of or under the control of Parent or SpinCo. Parent shall
also be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with privileged information that relates solely to the
subject matter of any claims constituting Parent Liabilities, now pending or
which may be asserted in the future, in any Action initiated against or by
Parent, whether or not the privileged information is in the possession of or
under the control of Parent or SpinCo.
(b) SpinCo shall be entitled, in perpetuity, to control the assertion
or waiver of all privileges in connection with privileged information which
relates solely to the SpinCo Business, whether or not the privileged information
is in the possession of or under the control of Parent or SpinCo. SpinCo shall
also be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with privileged information which relates solely to the
subject matter of any claims constituting SpinCo Liabilities, now pending or
which may be asserted in the future, in any Action initiated against or by
SpinCo, whether or not the privileged information is in the possession of SpinCo
or under the control of Parent or SpinCo.
(c) The parties hereto agree that they shall have a shared privilege,
with equal right to assert or waive, subject to the restrictions in this Section
4.5, with respect to all privileges not allocated pursuant to the terms of
Sections 4.5(a) and (b). All privileges relating to any Action, disputes or
other matters which involve Parent and SpinCo in respect of which such parties
retain any responsibility or liability under this Agreement, shall be subject to
a shared privilege among them.
(d) No party hereto may waive any privilege which could be asserted
under any applicable Law, and in which any other party hereto has a shared
privilege, without the consent of the other party, which consent shall not be
unreasonably withheld or delayed, except to the extent reasonably required in
connection with any Action with Third Parties or as provided in subsection (e)
below. Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within twenty days after notice upon the other party
requesting such consent.
(e) In the event of any Action or dispute between any of the parties
hereto, any party and a Subsidiary of another party hereto, or a Subsidiary of
one party hereto and a Subsidiary of another party hereto, either such party, to
the extent necessary in connection with such Action or dispute, may waive a
privilege in which the other party has a shared privilege, without obtaining the
consent of the other party, provided that such waiver of a shared privilege
shall be effective only as to the use of information with respect to such Action
or dispute between the relevant parties and/or their Subsidiaries, and shall not
operate as a waiver of the shared privilege with respect to Third Parties.
(f) If a dispute arises between or among the parties hereto or their
respective Subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the rights
of the other parties, and shall not unreasonably withhold consent to any request
for waiver by another party. Each party hereto specifically agrees that it will
not withhold consent to waiver for any purpose except to protect its own
legitimate interests.
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(g) Upon receipt by any party hereto or by any Subsidiary thereof of
any subpoena, discovery or other request which arguably calls for the production
or disclosure of information subject to a shared privilege or as to which
another party has the sole right hereunder to assert a privilege, or if any
party obtains knowledge that any of its or any of its Subsidiaries' current or
former Representatives has received any subpoena, discovery or other requests
which arguably calls for the production or disclosure of such privileged
information, such party shall promptly notify the other party of the existence
of the request and shall provide the other party a reasonable opportunity to
review the information (to the extent such information is available to such
party) and to assert any rights it or they may have under this Section 4.5 or
otherwise to prevent the production or disclosure of such privileged
information.
(h) The transfer of all Records and other information pursuant to this
Agreement is made in reliance on the agreement of Parent and SpinCo, as set
forth in Section 4.4 and this Section 4.5, to maintain the confidentiality of
privileged information and to assert and maintain all applicable privileges. The
access to information being granted pursuant to Sections 4.1 and 4.2 hereof, the
agreement to provide witnesses and individuals pursuant to Sections 2.7 and 3.3
hereof, the furnishing of notices and documents and other cooperative efforts
contemplated by Section 3.3 hereof, and the transfer of privileged information
between and among the parties and their respective Subsidiaries pursuant to this
Agreement shall not be deemed a waiver of any privilege that has been or may be
asserted under this Agreement or otherwise.
SECTION 4.6. Ownership of Information. Any information owned by one
party or any of its Subsidiaries that is provided to a requesting party pursuant
to Article III or this Article IV shall be deemed to remain the property of the
providing party. Unless specifically set forth herein, nothing contained in this
Agreement shall be construed as granting or conferring rights of license or
otherwise in any such information.
SECTION 4.7. Retention of Records.
(a) Parent shall deliver to SpinCo upon SpinCo's request all Records
that are specifically identified by SpinCo and known by Parent, after reasonable
inquiry, to be in its control or possession relating to SpinCo Assets, SpinCo
Liabilities or the SpinCo Business. Except (a) as provided in the Tax
Disaffiliation Agreement or (b) when a longer retention period is otherwise
required by Law or agreed to in writing, the Parent Group and the SpinCo Group
shall retain in a reasonably retrievable format, for a period of at least six
years, all Records relating to the SpinCo Business as of the Effective Time.
Notwithstanding the foregoing, in lieu of retaining any specific Records, Parent
may offer in writing to deliver such Records to SpinCo and, if such offer is not
accepted within ninety days, the offered Records may be destroyed or otherwise
disposed of at any time. If SpinCo shall request in writing prior to the
expiration of such ninety-day period that any of Records proposed to be
destroyed or disposed of be delivered to SpinCo, Parent shall promptly arrange
for delivery of such requested Records (at SpinCo's cost).
(b) SpinCo shall deliver to Parent upon Parent's request all Records
that are specifically identified by Parent and known by SpinCo, after reasonable
inquiry, to be in its control or possession relating to Parent Assets, Parent
Liabilities or the Parent Business. Except (i) as provided in the Tax
Disaffiliation Agreement or (ii) when a longer retention period is otherwise
required by Law or agreed to in writing, the Parent Group and the SpinCo Group
shall retain in a reasonably retrievable format, for a period of at least six
years, all Records relating to the Parent Business as of the Effective Time.
Notwithstanding the foregoing, in lieu of retaining any specific Records, SpinCo
may offer in writing to deliver such Records to Parent and, if such offer is not
accepted within ninety days, the offered Records may be destroyed or otherwise
disposed of at any time. If Parent shall request in writing prior to the
expiration of such ninety-day period that any of Records proposed to be
destroyed or disposed of be delivered to Parent, SpinCo shall promptly arrange
for delivery of such requested Records (at Parent's cost).
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SECTION 4.8. Limitation of Liability; Release.
(a) No party shall have any liability to any other party in the event
that any information exchanged or provided pursuant to this Agreement which is
an estimate or forecast, or which is based on an estimate or forecast, is found
to be inaccurate.
(b) Effective upon the Distribution and except as otherwise
specifically set forth in this Agreement, each of Parent and SpinCo releases and
forever discharges the other and its Representatives and Subsidiaries, of and
from all Liabilities against such other party, its Representatives and
Subsidiaries or any of its successors or assigns, which the releasing party has
or ever had, which arise out of or relate to events, circumstances or actions
taken by such other party prior to the Distribution; provided, however, that the
foregoing general release shall not apply to this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby and shall not
affect either party's right to enforce this Agreement or any of the Ancillary
Agreements in accordance with their terms.
SECTION 4.9. Other Agreements Providing for Exchange of Information.
The rights and obligations granted under this Article IV are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of information set forth in any Ancillary
Agreement.
ARTICLE V
DISPUTE RESOLUTION
SECTION 5.1. Negotiation. Subject to Section 5.6, in the event of a
controversy, dispute or claim arising out of, in connection with, or in relation
to the interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement
or the transactions contemplated hereby, including any claim based on contract,
tort, statute or constitution (but excluding any controversy, dispute or claim
arising out of any agreement relating to the use or lease of real property if
any Third Party is a party to such controversy, dispute or claim) (collectively,
"Agreement Disputes"), the management of the parties shall negotiate in good
faith for a reasonable period of time to settle such Agreement Dispute;
provided, however, such reasonable period shall not, unless otherwise agreed by
the parties in writing, exceed sixty days from the time a party has first given
written notice of such Agreement Dispute to the other party.
SECTION 5.2. Mediation. If after such reasonable period of negotiation
the parties are unable to settle such Agreement Dispute (and in any event,
unless otherwise agreed in writing by the parties, after ninety days have
elapsed from the time the parties began such negotiations) and the Agreement
Dispute involves a controversy, dispute or claim of less than $500,000, such
Agreement Dispute shall be determined, at the request of any party, by mediation
conducted in a location selected by the non-requesting party and acceptable to
the requesting party, before a retired judge sitting on the panel of Judicial
Arbitration & Mediation Services, Inc. The mediation process shall continue as
the exclusive method of resolving the Agreement Dispute (other than negotiation
between the parties) until the earlier of the Agreement Dispute being resolved
or the mediator finding in good faith that all settlement possibilities have
been exhausted and that the matter is not resolvable through mediation.
SECTION 5.3. Continuity of Service and Performance. Unless otherwise
agreed in writing, the parties will continue to provide services and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article V with
respect to all matters not subject to such dispute, controversy or claim.
SECTION 5.4. Other Remedies. Nothing in this Article V shall limit the
right that any party may otherwise have to seek to obtain from any court of
competent jurisdiction (i) preliminary injunctive relief in order to preserve
the status quo pending the resolution of a dispute or (ii) temporary or
permanent
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injunctive relief from any breach of any provisions of this Agreement. By
seeking such relief, a party in no way waives its arbitration rights under this
Agreement.
SECTION 5.5. Tolling. The parties acknowledge and agree that any
statute of limitations or any other defense that could be raised by a party
based upon the passage or expiration of time with respect to any Agreement
Dispute shall be suspended and tolled during the period in which the parties are
negotiating in good faith pursuant to Section 5.1 hereof and during the period
in which any mediation is pending or conducted pursuant to Section 5.2 hereof.
The parties' time to commence any action in connection with any Agreement
Dispute will not be extended by the number of days encompassed in the tolled
period, and no party will be prejudiced in any way by the passage of time during
the tolled period.
SECTION 5.6. Determination of Book Value. As soon as practicable
following the Distribution Date, each party (the "first party") shall submit to
the other such first party's calculation of its Book Value. In the event either
party disputes the other party's calculation of such other party's Book Value,
the parties agree that either party may submit such disagreement at any time to
Ernst & Young LLP, and that each party shall be bound by the determination of
such disputed Book Value made by Ernst & Young LLP.
ARTICLE VI
INSURANCE
SECTION 6.1. Allocation of Policies.
(a) Policies and Rights Included Within Assets. The SpinCo Assets shall
include (i) the SpinCo Policies, (ii) any and all rights of an insured party
under each of the Parent Shared Non-Carryover Policies, subject to the terms of
such Parent Shared Non-Carryover Policies and any limitations or obligations of
SpinCo contemplated by this Article VI, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer, with
respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses incurred or claimed to have been incurred
prior to the Effective Time by any party in or in connection with the conduct of
the SpinCo Business or the ownership of the SpinCo Assets or, to the extent any
claim is made against SpinCo or any of the SpinCo Subsidiaries, the conduct of
the Parent Business or the ownership of the Parent Assets, and which claims,
suits, actions, proceedings, injuries, losses, liabilities, damages and expenses
may arise out of an insured or insurable occurrence under one or more of such
Parent Shared Non-Carryover Policies, and (iii) any and all rights of an insured
party under each of the Parent Shared Carryover Policies, subject to the terms
of such Parent Shared Carryover Policies and any limitations or obligations of
SpinCo contemplated by this Article VI, with respect to all claims, suits,
actions, proceedings, injuries, losses, liabilities, damages and expenses
incurred or claimed to have been incurred prior to April 1, 2004 by any party in
or in connection with the conduct of the SpinCo Business or the ownership of the
SpinCo Assets, and which claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses may arise out of an insured or insurable
occurrence under one or more of such Parent Shared Carryover Policies.
(b) Parent Shared Non-Carryover Policies. Prior to the Distribution
Date, (i) Parent shall cause SpinCo to be named as an additional named insured
under each of the Parent Shared Non-Carryover Policies, and (ii) Parent shall
purchase extended reporting period coverage for a period of _______ years
following the Distribution Date under each Parent Shared Non-Carryover Policy.
(c) Parent Shared Carryover Policies. Parent shall maintain the
effectiveness of each Parent Shared Carryover Policy, with coverages equal to or
greater than the coverages in effect under such Policies as of the date hereof,
and shall cause SpinCo to be an additional named insured under each such Policy,
until April 1, 2004.
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SECTION 6.2. Post-Effective Time Claims. If, subsequent to the
Effective Time, any Person shall assert a claim against SpinCo or any of the
SpinCo Subsidiaries (including where SpinCo or the SpinCo Subsidiaries are joint
defendants with other Persons) with respect to any claim, suit, action,
proceeding, injury, loss, liability, damage or expense incurred or claimed to
have been incurred prior to the Effective Time in or in connection with the
conduct of the SpinCo Business or the ownership of the SpinCo Assets or, to the
extent any claim is made against SpinCo or any of the SpinCo Subsidiaries
(including where SpinCo or the SpinCo Subsidiaries are joint defendants with
other Persons), the conduct of the Parent Business or the ownership of the
Parent Assets, and which claim, suit, action, proceeding, injury, loss,
liability, damage or expense may arise out of an insured or insurable occurrence
under one or more of the Parent Shared Non-Carryover Policies, Parent shall
assert and collect any related Insurance Proceeds under such Parent Shared
Non-Carryover Policy on behalf of SpinCo and remit promptly to SpinCo any
Insurance Proceeds so collected, and Parent shall further on behalf of SpinCo
assert any and all rights of an insured party under such Parent Shared
Non-Carryover Policy with respect to such asserted claim, specifically including
rights of indemnity and the right to be defended by or at the expense of the
insurer and the right to any applicable Insurance Proceeds thereunder. The
parties hereby acknowledge and agree that nothing herein shall limit SpinCo's
right to assert directly and collect any related Insurance Proceeds under any
Parent Shared Policy and that, should SpinCo become liable for any Parent
Liabilities covered by any Parent Shared Policy or any Parent Policy, SpinCo
shall have the right to assert directly and collect any related Insurance
Proceeds under any such Parent Shared Policy or Parent Policy.
SECTION 6.3. Administration; Other Matters.
(a) Administration. Subject to Section 6.3(c) and Section 6.3(d), after
the Effective Time, (i) Parent shall be responsible for (A) Insurance
Administration of the Parent Shared Policies with respect to all Liabilities
except SpinCo Liabilities and (B) Claims Administration (except as provided
below) under such Parent Shared Policies with respect to all Liabilities except
SpinCo Liabilities, and (ii) SpinCo shall be responsible for (A) Insurance
Administration of the Parent Shared Policies with respect to all SpinCo
Liabilities and (B) Claims Administration (except as provided below) under such
Parent Shared Policies with respect to all SpinCo Liabilities; provided,
however, that the retention of such responsibilities by Parent or SpinCo, as the
case may be, is in no way intended to limit, inhibit or preclude (i) any right
to insurance coverage for any Insured Claim of a named insured under such
Policies as contemplated by the terms of this Agreement or (ii) the sharing
between Parent and SpinCo of information relating to the matters addressed in
this Article VI; and provided further that Parent's retention or SpinCo's
retention, as the case may be, of the administrative responsibilities for the
Parent Shared Policies shall not relieve the party submitting any Insured Claim
of the primary responsibility for reporting such Insured Claim accurately,
completely and in a timely manner or of such party's authority to settle any
such Insured Claim within any period permitted or required by the relevant
Policy. Parent or SpinCo, as the case may be, may discharge its administrative
responsibilities under this Section 6.3 by contracting for the provision of
services by independent parties. Each of the parties hereto shall administer and
pay any costs relating to defending its respective Insured Claims under Parent
Shared Policies to the extent such defense costs are not covered under such
Policies and shall be responsible for obtaining or reviewing the appropriateness
of releases upon settlement of its respective Insured Claims under Parent Shared
Policies. SpinCo shall reimburse Parent promptly for all disbursements,
out-of-pocket expenses and direct and indirect costs of employees or agents of
Parent relating to Claims Administration and Insurance Administration
contemplated by this Section 6.3(a) on behalf of SpinCo. Likewise, Parent shall
reimburse SpinCo promptly for all disbursements, out-of-pocket expenses and
direct and indirect costs of employees or agents of SpinCo relating to Claims
Administration and Insurance Administration contemplated by this Section 6.3(a)
on behalf of Parent.
(b) Claims. SpinCo may, subject to Section 6.3(c) and Section 6.3(d),
claim coverage for Insured Claims under a Parent Shared Policy in accordance
with the terms of Section 6.1 as and to the extent that such insurance is
available up to the full extent of the applicable limits of liability of such
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Parent Shared Policy (and may receive any Insurance Proceeds with respect
thereto as contemplated by Section 6.2 or Section 6.3(c) hereof), subject to the
terms of this Section 6.3.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received with
respect to claims, costs and expenses under the Parent Shared Policies shall be
paid directly to the appropriate Person or to Parent, which shall thereafter
administer the Parent Shared Policies by paying the Insurance Proceeds, as
appropriate, to Parent with respect to Parent Liabilities and to SpinCo with
respect to the SpinCo Liabilities. Payment of the allocable portions of
indemnity costs of Insurance Proceeds resulting from such Policies will be made
by Parent to the appropriate Person upon receipt from the insurance carrier. In
the event that the applicable limits on any particular Parent Shared Policy are
exceeded by the amount of outstanding Insured Claims by the relevant parties
hereto, such parties agree to allocate the Insurance Proceeds received
thereunder based upon their respective percentage of the total of their bona
fide claims (measured as of the date costs related to such bona fide claims were
incurred, such incurrence to be measured, (i) in the case of fees and expenses
incurred for services performed that are attributable to the defense or
disposition of Insured Claims, as of the date such fees and expenses are billed
to an insurance carrier, and (ii) in the case of sums payable in settlement or
satisfaction of a judgment attributable to Insured Claims, as of the date of any
such judgment) which were covered under such Parent Shared Policy (their
"allocable portion of Insurance Proceeds"), and any party who has received
Insurance Proceeds in excess of such party's allocable portion of Insurance
Proceeds shall pay to the other party the appropriate amount so that each party
will have received its allocable portion of Insurance Proceeds pursuant hereto.
Each of the parties agrees to use commercially reasonable efforts to maximize
available coverage under those Parent Shared Policies applicable to it, and to
take all commercially reasonable steps to recover from all other responsible
parties in respect of an Insured Claim to the extent coverage limits under a
particular Parent Shared Policy have been exceeded or would be exceeded as a
result of such Insured Claim.
(d) Allocation of Deductibles, Etc. In the event that the parties have
bona fide claims under any Parent Shared Policy for which a deductible or a
retrospectively rated premium adjustment is payable or for which a
self-insurance retention amount has been applied, the parties agree that the
aggregate amount of the deductible or retrospectively rated premium adjustment
paid or retention amount applied shall be borne by the parties in the same
proportion which the Insurance Proceeds received by each such party bears to the
total Insurance Proceeds received under the applicable Parent Shared Policy
(their "allocable share of the deductible, premium adjustment or retention
amount"), and any party who has paid more than its allocable share of the
deductible, premium adjustment or retention amount shall be entitled to receive
from the other party an appropriate amount so that each party has borne its
allocable share of the deductible, premium adjustment or retention amount
pursuant hereto. Further, if a party receives no Insurance Proceeds under that
applicable Parent Shared Policy, that party shall have no allocable share of the
deductible, premium adjustment or retention amount under that applicable Parent
Shared Policy, and the other party shall bear all of the allocable share of the
deductible, premium adjustment or retention amount under that applicable Parent
Shared Policy.
(e) Continued Responsibility. Notwithstanding anything in this Article
VI to the contrary, the Parent Group shall remain liable to the SpinCo
Indemnitees for the indemnification obligations contemplated by Section 3.1, and
the SpinCo Group shall remain liable to the Parent Indemnitees for the
indemnification obligations contemplated by Section 3.2, in each case, to the
extent any Loss or Liability is not fully paid to or on behalf of the applicable
party by Insurance Proceeds.
SECTION 6.4. Agreement for Waiver of Conflict and Shared Defense. In
the event that Insured Claims of more than one of the parties hereto exist
relating to the same occurrence, the parties shall jointly defend and waive any
conflict of interest necessary to the conduct of the joint defense. Nothing in
this Article VI shall be construed to limit or otherwise alter in any way the
obligations of the parties to this Agreement, including those created by this
Agreement, by operation of Law or otherwise.
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SECTION 6.5. Cooperation. The parties agree to use their commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Complete Agreement; Construction. This Agreement,
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Other than Section 2.4, Section 4.5 and Article V, which shall prevail over any
inconsistent or conflicting provisions in any Ancillary Agreement,
notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 7.2. Ancillary Agreements. Subject to the last sentence of
Section 7.1, this Agreement is not intended to address, and should not be
interpreted to address, the matters specifically and expressly covered by the
Ancillary Agreements.
SECTION 7.3. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 7.4. Survival of Agreements. Except as otherwise contemplated
by this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Effective Time.
SECTION 7.5. Distribution Expenses. Except as otherwise set forth in
this Agreement or any Ancillary Agreement, all costs and expenses incurred prior
to the Effective Time which are outstanding as of the Effective Time or arise
after the Effective Time in connection with the preparation, execution,
delivery, printing and implementation of this Agreement and any Ancillary
Agreement, the Registration Statement (including the Information Statement) and
the Distribution and the consummation of the transactions contemplated thereby
(including any transfer taxes imposed on the transfer of real or personal
property in the Corporate Transactions) shall be charged to and paid by Parent,
and such costs and expenses shall be deemed to be Parent Liabilities. Further,
except as otherwise set forth in this Agreement or any Ancillary Agreement
(including the retention and assumption by the Parent Group of the Parent
Liabilities and the retention and assumption by the SpinCo Group of the SpinCo
Liabilities in accordance with Section 2.2 hereof), all other Liabilities (to
the extent not otherwise satisfied prior to the Effective Time) directly
resulting from actions taken prior to the Effective Time in connection with the
preparation, execution, delivery, printing and implementation of this Agreement
and any Ancillary Agreement, the Information Statement (including the
Registration Statement) and the Distribution and the consummation of the
transactions contemplated thereby shall be deemed to be Parent Liabilities.
Except as otherwise set forth in this Agreement or any Ancillary Agreement, each
party shall bear its own costs and expenses incurred after the Effective Time,
and any amount or expense to be paid or reimbursed by any party hereto to any
other party hereto shall be so paid or reimbursed promptly after the existence
and amount of such obligation is determined and written demand therefor is made.
SECTION 7.6. Notices. All notices and other communications hereunder
shall be in writing, shall reference this Agreement and shall be hand delivered
or mailed by registered or certified mail (return receipt requested) or sent by
any means of electronic message transmission with delivery confirmed (by voice
or otherwise) to the parties at the following addresses (or at such other
addresses for
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a party as shall be specified by like notice) and will be deemed given on the
date on which such notice is received ("Notices"):
To Parent:
F.N.B. Corporation
Xxx X.X.X. Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: _______________________
To SpinCo:
First National Bankshares of
Florida, Inc.
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: _______________________
SECTION 7.7. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION 7.8. Amendments. Subject to the terms of Section 7.10 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties hereto.
SECTION 7.9. Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 7.10. Termination. This Agreement (including Article III
hereof) may be terminated and the Distribution may be amended, modified or
abandoned at any time prior to the Effective Time by and in the sole discretion
of Parent without the approval of SpinCo or the stockholders of Parent. In the
event of such termination, no party shall have any liability of any kind to any
other party or any other Person. After the Distribution, this Agreement may not
be terminated except by an agreement in writing signed by the parties; provided,
however, that Article III shall not be terminated or amended after the
Distribution in respect of any Indemnitees not a party to this Agreement without
the consent of such Persons.
SECTION 7.11. Subsidiaries. Parent shall cause to be performed, and
hereby guarantees the performance of, all actions, agreements and obligations
set forth herein to be performed by any Parent Subsidiary. SpinCo shall cause to
be performed, and hereby guarantees the performance of, all actions, agreements
and obligations set forth herein to be performed by any SpinCo Subsidiary.
SECTION 7.12. Third-Party Beneficiaries. Except for the right of
Indemnitees to enforce the provisions of Article III hereof, this Agreement is
solely for the benefit of the parties hereto and their respective Subsidiaries
and Affiliates and should not be deemed to confer upon Third Parties any remedy,
claim, liability, reimbursement, cause of action or other right in excess of
those existing without reference to this Agreement.
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SECTION 7.13. Title and Headings. Titles and headings to Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.14. Exhibits and Schedules. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
SECTION 7.15. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of
Florida, without regard to
any conflicts of Laws principles.
SECTION 7.16. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic or operational effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 7.17. Consolidation, Merger, Etc.
(a) Involving SpinCo. SpinCo shall not consolidate with or merge into
any other Person or convey, transfer or lease all or any substantial portion of
its properties and assets to any Person, unless, in each case such Person is a
corporation, partnership, limited liability company or trust and expressly
assumes, by a written agreement, executed and delivered to Parent, in form
reasonably satisfactory to Parent, all of the liabilities, obligations and
expenses to be assumed by SpinCo under this Agreement and the due and punctual
performance or observance of every agreement and covenant of this Agreement and
the Ancillary Agreements on the part of SpinCo to be performed or observed.
(b) Involving Parent. Parent shall not consolidate with or merge into
any other Person or convey, transfer or lease all or any substantial portion of
its properties and assets to any Person, unless, in each case such Person is a
corporation, partnership, limited liability company or trust and expressly
assumes, by a written agreement, executed and delivered to SpinCo, in form
reasonably satisfactory to SpinCo, all of the liabilities, obligations and
expenses to be assumed by Parent under this Agreement and the due and punctual
performance or observance of every agreement and covenant of this Agreement and
the Ancillary Agreements on the part of Parent to be performed or observed.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
F.N.B. CORPORATION
By:
-----------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice Chairman
FIRST NATIONAL BANKSHARES OF
FLORIDA,
INC.
By:
-----------------------------------
Xxxx X. Xxxx, Chairman and Chief
Executive Officer
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